Endowment Policy/Mortgage. Has anyone made a complaint successfully in Ireland?

Daibheid

I'm surprised at how little this topic rears its head on here but I think the explanation lies in the twin reasons that
A) Many people got out of them becasue they moved house before the term was up or
Property values increased so much that people weren't bothered by shortfalls in mortgages and people remortgaged anyway to release some of that increased value.

Unfortunatley I've still got mine and it's appraoching maturity next year and you've guessed it will come up well short of what I'll still owe and I don't want to sell out leaving me with quite a shortfall to make up.

I have complained to BoI that the policy was mis-sold - I mean it was a with-profits policy so I figured that was the safety net if it underperformed. But they insist I was made aware of the risks etc. I dissagree becasue no-one made any effort to talk to me about the product and we know someone took an enormous commision from the first year or so of contributions - possibly 80-905 of what was paid in. BoI completely ignored my request for details of the commision structure and who actually got it!

Bottom line is I'm getting nowhere with BoI and they've now sent me details of the Ombudsman if I want to pursue my complaint there. However when I read the Ombudsman leaflet they sent I think they're having a laugh.:mad: As I read it he'll only go back 6 years but he'd need to go back about 3x that to reach most of the endowment mortgages sold here. BoI have to know that unless I'm reading the rules wrong.

I'd appreciate any advice on how to pursue this because I still don't understand how the UK banks had to issue compensation for mis-selling Endowment policies while the same banks in Ireland appear to have walked away from any accountability on the same issue?

Fitz1

I am in the same boat, BOI endowment mortgage shortfall in 2011
I increased my payments the last 2/3 years and doubled them this
year 2009 but I am just wondering am I just wasting money?

babaloushka

We were definitely mis-sold an endowment re-mortgage, because we didn't find out until we went in to sign the final agreement that it was not an ordinary repayment mortgage. This happened about 17 years ago at an 'independent' mortgage/financial advice agency, not a bank.
I had specifically asked for a repayment mortgage but they claimed at the time that I hadn't :mad: Because all our financial arrangements were ready to go, including a car purchase and home improvements, we had to go ahead - it would have taken at least 2 months to go through the process again (according to them). We were, of course, assured that the endowment mortgage was the greatest thing since sliced bread - even the director of the company himself had the same one and he was going to be 'quids in' when it matured!
We soon found out that this was all bull**** but were trapped for years until we were in a position to renegotiate and start again a few years ago. While we got out before the worst effects, we still lost out badly on what we paid and I am still sore :mad: We tried to make a complaint, especially when we discovered the paltry amount that was realised, but were fobbed off and given the run around.
That company still send us letters inviting us to let them look after our investments and extolling their independence and their integrity - not in a million years and we make strenuous efforts to tell everyone we know to avoid them. They may have cleaned up on the commission, but they've lost out since, I hope.

Fitz1

I don't want to complain as I think it would be a waste of time,
I just want to know if I am trowing good money after bad?

Drumpot

Just a suggestion . . .

Give the Financial ombudsman a call and briefly outine your grievance and mention the fact that you are concerned regarding the 6 year ruling. All they can say is either you have no chance or refer you to their procedure:

Send a complaint in writing to the provider in question. They are obliged to answer you officially and attempt to resolve the issue within 25 working days.

When they respond and if you are still unsatisfied, reiterate your dissatisfaction and say you will refer this case to the financial ombudsman if they do not meet your demands (whatever they are).

After 15 working days , if its not resolved refer it to the financial ombudsman.

Pablo Sanchez

Fitz1 wrote: »

I am in the same boat, BOI endowment mortgage shortfall in 2011
I increased my payments the last 2/3 years and doubled them this
year 2009 but I am just wondering am I just wasting money?

Yeah you are probably wasting your money, i would approach your lender to see if there is a way to convert the amount oustanding to a regular interest and capital loan. isuppose it all depends on the performance you expect your investment to make in the next two years.

As far as im concerned people who took out endowment mortgages should take their own responsability for their shortfalls and not go whinging that it didnt perform as they expected it to. They took a risk with a view to making a profit at the end of the day.

Show_me_Safety

while i have no doubt that a small minority of people were mis-sold and endowment policy, i believe that the party accountable here is the customer. The risks would have been outlined in their approval drawdown. There would be a clear statement on how to deal with the shortfall. This will prob turn into another fixed rate type thing once joe duffy gets wind of this

amdublin

My experience with endowment mortgages is that people know they were not miss-sold ie. all risks were explained to them. But people clung on to the fact that they could end up with more than the mortgage at maturity (ie. therefore making a profit for themselves). Now that they're underperforming and they are left with a deficit their complaint seems to be: why was I advised to take this out.

My belief is that out the time they were advised to take it out it was good advice. Mortgage rates were high and therefore interest rates were high and investment funds were also performing well so it looked extremely likely that yes they would end up with surplus money. Unfortunately this changed over the years: mtg/interest rates are down and funds are not performing comparing to what was predicted 20/25 years ago.

People make choices and when it is the wrong choice they look to blame someone. They choose fixed rates and when it ends up they are paying above the odds they are unhappy. They choose variable and when the mtg rates are up and others are fixed at lower they are unhappy.

People need to take responsibility for their own choices and actions.

dotsman

Daibheid wrote: »

I have complained to BoI that the policy was mis-sold - I mean it was a with-profits policy so I figured that was the safety net if it underperformed.

The "I figured" is the big problem here. The problem is that a lot of people "figure" about financial products and then claim it was mis-sold if the gamble doesn't pay off.

I'm not saying that that is what happened in your case, but it does happen a lot. To identify mis-selling, you would need to prove that the endowment policy was sold to you as "safe" or "guaranteed" and without a warning that the policy may not cover the full amount of the loan.

Do you (or anyone else stuck in this boat) have their original documentation? If there are no warnings on it, or describes the product as safe/guaranteed, then you definitely have a case. Without that, and given the timeline, I don't know how it can be resolved.

As a matter of interest, I assume you received statements throughout the life of the mortgage. Was the shortfall identified in these accounts, or is it just now as the policy is coming to an end?

Ultimately, Endowment mortgages were an expensive gamble (basically you're paying an interest-only mortgage for the entire duration, while the whole time, trying to build up a fund 4 times the original loan amount), and are thankfully not offered by lenders any more (as they were bad for both banks and consumers). The safest, cheapest and most responsible loans for both the consumer and bank are annuity mortgages (capital and repayment). If you want to be extra safe (fix half and leave the other half variable!)

It's a bit like trackers. They were all the rage for a while, but are no longer in the bank's best interest, so have gone from the market, and again we are back to plain-old-vanilla annuities.

broker2008

On many many occasions over the years,the providers have written out to policyholders to give them an update of their plans with many suggesting that it was prudent to increase premiums of the endowment policy to ensure that there was no shortfall at maturity.The original projections were based on assumed investment returns, which have reduced over the years however interest rates reduced significantly over these years also so that is why premiums would have to be increased to have any chance to reach loan amount at maturity.

Daibheid

I'm amazed here. The OP - by me- was pretty specifically titled but there are still a bunch of people who feel they've been invited on here to post their opinions on endowment mortgages and people's motivation in taking them out. I didn't ask for opinions -smug or otherwise- on why others didn't take them out. There are good reasons the media refer to the "endowment mis-selling scandal". Also recent revelations about the way our financial institiutions and those that are supposed to regulate them interract explain why the more recent options for issues with financial poducts and services are structured to put endowment mortgage mis-selling beyond thier remit. It may also explain why some of the same businesses operating in Ireland were legally obliged to recompense people in the UK but not here.

I wonder too if some of these 'experts' are as quick to presume to tell their older friends or family finding their pension schemes are coming unstuck that they should have refused any form of investment risk and were basically gambling.

So any further contributions on this thread should be from people who have knowledge or actual experience of making complaints about these mortgages. Those who want to comment on why people have/haven't those mortgages - probably posting while sitting on a single mattress stuffed with money in their childhood bedroom under their Mum's roof - cease threadspoiling and start your own thread where you can self-congraulate and thank each other as much as you like.

Now to something that might be of interest to people with one of these mortgages. A couple of years back I realized I was paying the exact same interest rate as people with repayment mortgages. In other words while I wasn't reducing my loan amount I was paying the same rate as people who were. A sharply worded letter requesting a refund of the difference and some phone calls and I got a satisfactory result and switched onto a tracker rate.

On increasing payments I've always viewed increasing endowment policy payments as throwing good money after bad. I'd recommend holding the policy contributions to the minimum and putting any extra you can manage in a regular savers account in another bank. Use that to make up some of the inevitable shortfall.

BuffyBot

Unfortunately, on a discussion board, you don't get to shelter from alternative points of views - even when they're deeply critical of you. For someone who's been around here for so long, you should know that.

broker2008

Daibheid wrote: »

On increasing payments I've always viewed increasing endowment policy payments as throwing good money after bad. I'd recommend holding the policy contributions to the minimum and putting any extra you can manage in a regular savers account in another bank. Use that to make up some of the inevitable shortfall.

That would work also and it shows that you have an understanding into the workings of an endowment mortgage. The difficulty will arise where people choose to ignore warnings of potential shortfalls and then try to point a finger of blame at or near maturity. This was flagged by the industry as early as 1992.

Daibheid

BuffyBot wrote: »

Unfortunately, on a discussion board, you don't get to shelter from alternative points of views - even when they're deeply critical of you. For someone who's been around here for so long, you should know that.

Indeed I do know that. I also know what Off-Topic looks like and how to recognize Trolls......

Daibheid

broker2008 wrote: »

That would work also and it shows that you have an understanding into the workings of an endowment mortgage. The difficulty will arise where people choose to ignore warnings of potential shortfalls and then try to point a finger of blame at or near maturity. This was flagged by the industry as early as 1992.

It was an expensively acquired understanding way too late to avoid having an endowment!:D
You're right about the difficulty where people chose to ignore warnings -only issued long after they'd signed up- but I think you're being kind to the industry. The lid was lifted on the problems with endowments by people like Eddie-love-him-or-hate-him-he's-right-Hobbs. The revised frequency and depth of warnings and reviews requirements were enforced by new legislation on an unwilling industry.
None of this was really of help to people who had been mis-sold endowment policies. It just meant they could start to prepare earlier to pay up for the shortfall. Unfortunately quite a few of those who did up their premia may have seen that extra evaporate as the funds performed even worse since.

The difficulty as you put it only really arose once the contract had been signed -the mis-selling aspect which I think is generally accepted to have occurred to some degree in Ireland just as it did in the UK. People who took out those mortgages are likely to have different views to those who may never have been offered one or people who actually sold them and booked the first year or two of contributions as commission before anything began to get invested.

Toots

Daibheid wrote: »

Indeed I do know that. I also know what Off-Topic looks like and how to recognize Trolls......

And I'm assuming that you also know how to use the 'Report Post' function, should you suspect that a poster is trolling.........

brosmi

I took out an endowment mortgage in 1989 with EBS. Policy was with Royal Life now (Phoenix). Shortfall was over 20k. After many letters I managed to get compensation of over 15k.

Had all my original sales brochure which clearly state mortgage would be repaid.

Phoenix obviously tried to get out of it but finally coughed up. So yes it can be done.

Daibheid

brosmi wrote: »

I took out an endowment mortgage in 1989 with EBS. Policy was with Royal Life now (Phoenix). Shortfall was over 20k. After many letters I managed to get compensation of over 15k.

Had all my original sales brochure which clearly state mortgage would be repaid.

Phoenix obviously tried to get out of it but finally coughed up. So yes it can be done.

I don't now whether I'm more pleased to see an on-topic response or to hear that you were successful with a complaint.:) Either way I appreciate the post. From my own experience so far both with the banks and the so-called consumer protection supports, I can imagine what a battle you had.

Could you perhaps explain what if any was the tipping-point in getting that result? I do have a piece of sales literature which expressed confidence the loan would be paid by the policy if that was it!

amdublin

Daibheid wrote: »

I don't now whether I'm more pleased to see an on-topic response or to hear that you were successful with a complaint.:) Either way I appreciate the post.

Maybe, just maybe, your tone/attitude is turning people off replying to you?

Anyway, if you have some literature that expresses that the loan will be paid off and that there is no risk element attached I am sure that will go along way to help your case/complaint. Good luck.

macy9

To answer the op's question there was a case recently involving 2 doctors who took their bank to court....sorry, the details are sketchy. If I find the case Il post it. It was in the Irish Times if anyone remembers. But they had some success.

Another case where the complainant was unsuccessful:

Endowment Mortgage shortfall – not upheld
Holders of an endowment mortgage were advised that their 15 year mortgage would be repaid
after a period of 13 years & 7 months. After 14 years the holders received notice that the
proceeds of their policy would not be sufficient to discharge the mortgage debt. They
complained that the mortgage provider failed to assess and notify them of the performance of
the policy, and it was not until 14 years had elapsed that they were made aware of the
anticipated shortfall of the proceeds.
The Ombudsman found that the holders had been kept informed during the course of the
mortgage and the manner in which the fund fluctuated up and down had been explained to
them. The complaint was therefore unjustified and was not upheld.
Comment
The Ombudsman will not make an order for compensation to be paid in situations where the
investor was fully informed of the risks involved and the poor return is merely a consequence
of the performance of the markets.

Andymfinancial

I know of 4 cases in uk which were all paid compensation. The main complaint raised was the fact that even though the risks were explained, they were informed that these risks were small. Also as the years passed by they were not updated with potential shortfalls until it was too late. Finally the other big issue is that when you were sold the endowment mortgage were you presented with the alternative ie repayment mortgage quotation and informed that this was the safer option because it is guaranteed to be cleared at the end of the term.

If you have no luck with the bank then take the compalint to the ombudsman. At least they will investigate fully and establish what records the bank have in relation to the advice.

If you have no luck with any of this then i would advise you to ask the bank for part repayment part interest only. I certainly would not increase payments to the endowment policy. Have you also considered getting a value from the companies who buy endowment plans. You would then be able to pay off a large chunk of the loan and convert the remainder to repayment.

Toots

Old thread.

Toots

Re-opened for OP update.

Daibheid

Andymfinancial wrote: »

I know of 4 cases in uk which were all paid compensation. The main complaint raised was the fact that even though the risks were explained, they were informed that these risks were small. Also as the years passed by they were not updated with potential shortfalls until it was too late. Finally the other big issue is that when you were sold the endowment mortgage were you presented with the alternative ie repayment mortgage quotation and informed that this was the safer option because it is guaranteed to be cleared at the end of the term.

It looks like things are hotting up for the banks:
By Ray Managh
Wednesday May 12 2010
Endowment mortgages being sold to house buyers by banks in the early 1990s had all the transparency of cast concrete, financial adviser Eddie Hobbs told a judge yesterday.

Mr Hobbs is giving expert evidence in a negligence claim against the Bank of Ireland by pensioners Louis and Margaret Kilmartin, Strand Road, Portmarnock, Co Dublin, who allege they lost more than €22,000 over the 15-year lifetime of the mortgage on their home.

Barrister David Hardiman, SC, for the Kilmartins, told the Circuit Civil Court they incurred loss as a result of negligent advice by the bank of the superior security and return of endowment mortgages over annuity ones.

It is the first of numerous claims against finance houses who advised clients against buying an annuity mortgage and allegedly failed to warn them of the risks attached to endowment mortgages. Alex Owens, who appeared with Paul McGarry for the bank, which denied negligence, said his client's position was simple. The endowment mortgage sold to the Kilmartins had proved €5,000 cheaper than an annuity mortgage.

Sales

Mr Hobbs told the court that Bank of Ireland branch managers had been given endowment policy sales targets to meet at the time and as a result their traditional role of cautionary adviser to customers had changed to that of financial sales people.

The lay person had no chance of seeing through the type of presentation used by the bank to promote its endowment products. The Kilmartins had borrowed money at 11.85pc for a net return of around 3.5pc per annum, he said.

Mr Hobbs's evidence before Justice Matthew Deery, continues today.

Mr Hardiman told the court the damages claimed represented a shortfall in an endowment mortgage policy they had bought in 1991. They had been promised a "nice little nest egg" surplus after a 15-year repayment period but instead Mr Kilmartin, at the age of 68, had to repay the shortfall of €4,864 from his retirement pension.

He said the claim arose out of the negligent failure of the defendant's bank manager to advise on the nature of an endowment mortgage and the negligent misrepresentation of the value and suitability of an endowment policy.

Mrs Kilmartin, who had dealt with the bank, had been sold over the phone an endowment policy and told it would pay off the €50,000 mortgage with surplus in 15 years.

- Ray Managh

Irish Independent

Daibheid

Not only did the court compensate for the shortfall at €6,039 but also €1,963 compensation for additional premiums and interest and €8,000 for the loss of projected surplus.

Total award of €16,002.

No surprise the Bank will appeal to the High Court but I can't see the ruling being overturned completely. It's going to be interesting to see if the various banks change their response and are willing to negotiate settlements. If not there'll be a lot more cases before the courts as about 70 people had engaged this firm of solicitors with another 40-50 coming forward during this case.

You can read the Irish Times summary here

Some of Eddie Hobbs comments:

'I'm delighted for the Kilmartins. It is a very significant case. The actual presentation of the information to the Kilmartins was absolutely the common standard throughout the industry in those times.

'You would need to have a lot of financial training to see beyond that flawed presentation. Most consumers couldn't.

'It really wasn't until this decade that proper consumer protection started to arrive, when in 2001 we finally had the right to see who was earning what on these products.

'It's taken them 20 years for the dawn to arrive and for them to actually see just what kind of a problem they've had with these things. For the life insurance and banking industry they don't sell these things any more as they can't get away with it.'

Daibheid

Bank won't appeal court's €16,000 award to couple for 'bad advice'

Thursday November 25 2010
BANK of Ireland has decided not to appeal a court decision to award €16,000 to a Dublin couple who won a case after they said they were given bad advice when they took out an endowment mortgage.

The decision was made by the Circuit Civil Court in May, in a move which is expected to prompt hundreds of homeowners who took out these kinds of mortgages to also sue.

Lawyers for the bank had indicated after the award was made that the decision would be appealed to the High Court.

Louis and Margaret Kilmartin, both in their early 70s, who live in Strand Road, Portmarnock, Co Dublin, had claimed in the Circuit Civil Court that they lost more than €22,000 over the 15-year lifetime of their mortgage.

Lawyers said they incurred the loss as a result of negligent advice by the bank regarding the superior security and return of endowment mortgages over annuity mortgages.

Instead of providing them with "a nice little nest egg" in retirement, they had lost out significantly.

Mr Justice Matthew Deery decided the couple had been badly advised. He said he had been impressed with the clear recall of Mrs Kilmartin regarding her dealings with the bank in 1991, and had been influenced by the opinions of financial experts, including Eddie Hobbs.

Downside

If bank manager Pat Martin had warned Mrs Kilmartin on the telephone about the downside of taking out an endowment mortgage, as he claimed he had, it would have been natural to have repeated the warning, which he had not, in a follow-up letter of May 2, 1991.

Mrs Kilmartin had told the court Mr Martin had recommended the endowment mortgage.

"I conclude without hesitation that the documentation, far from warning of risk to the sum available at the end of the mortgage, suggested there was no risk," Mr Justice Deery added.

He said the Kilmartins were entitled to recover the shortfall of the endowment policy to meet the €63,000 mortgage on maturity, and set that sum at €6,039. They were also entitled to €1,963 compensation for additional premiums and interest, and €8,000 for loss of projected surplus.

An endowment mortgage is usually an interest-only loan where a separate endowment policy is started and paid for separately.

- Charlie Weston Personal Finance Editor

Irish Independent

amdublin

Thanks for the update on the Kilmartins Daibead.

How is your own complaint going?

Daibheid

amdublin wrote: »

Thanks for the update on the Kilmartins Daibead.

How is your own complaint going?

You're welcome.

My complaint is being dragged out forever but is effectively stonewalled by Lifetime as the policy creators and the bank branch as the joint sellers. Lifetime simply ignore the part of the complaint on mis-selling and emphasize all the times they reviewed and advised premium increases etc and warnings re maturity values. Repeatedly asking them to deal with that in writing elicited nothing but photocopies of all the interim stuff so they won't address the actual mis-selling.

I've addressed the mis-selling complaint to the bank branch who did actually promote the policy. They're a lot less ignorant than lifetime to deal with but have kicked the responsibility for addressing it upstairs. I'll give them a while more and the complain to the Ombudsman about the process of addressing my complaint. lifetime smugly sent me the Ombudsman Brochure -secure in the knowledge that Irish regulations were written to exclude policies sold in the '90s from the Ombudsman's remit. However I'm satisfied I can complain about undue delay in the handing of a complaint to a bank regardless of the subject matter. It's basically a matter of asking for an official "Final Response" after which the bank or any similar institution have 25 working days to provide it or incur the displeasure of the ombudsman.

I'm not in a rush on this as the law seems firmly on the side of people not caught by the statute of imitations and with an adequate paper trail. IMHO BoI and others would be wise to start making sensible settlement proposals in 2011.

Are you in a similar situation i.e. have had or hold an endowment policy or maybe you sold a few? ;-)

amdublin

Daibheid wrote: »

Are you in a similar situation i.e. have had or hold an endowment policy or maybe you sold a few? ;-)

No I've just been following this thread from the start and am interested to see how things work out for you (considering the Kilmartins case and the uk cases).

In your case what is your basis for your complaint of miss-selling eg. Was it guaranteed your loan would be paid off? Were you given any literature at the point of sale - what did this say?

RJaycee

I have just come across this thread. I have an Endowment Mortgage with BofI which is just about to mature. The value at maturity is about 65% of the figure indicated at the start. This leaves me with a very significant shortfall to pay up. We all know we were mis-sold these policies but it is very difficult to prove and taking the legal course could be more costly than its worth. I tried the Ombudsman and that was a complete waste of time because they apply the statute of limitations and it begs the question of who in their right mind would have taken out an endowment mortgage in recent years.
I was particularly interested in a point you made some time ago where you said "I was paying the exact same interest rate as people with repayment mortgages. In other words while I wasn't reducing my loan I was paying the same rate as people who were."
Can you elaborate on that point. On what basis can you argue that a different rate should have applied

Daibheid

amdublin wrote: »

In your case what is your basis for your complaint of miss-selling eg. Was it guaranteed your loan would be paid off? Were you given any literature at the point of sale - what did this say?

That was my understanding especially going for a with-profits policy. The description 'with profits' made it pretty clear it would pay off and then some.

Literature was mainly projections showing only an idiot would opt for a repayment mortgage plus the atached which came with the policy.
I'm responding to your question out of courtesy amd in case it helps others like those PMing me - not for opinions along the lines of "anyone with half a brain... and you should have.... etc"